Recovered Money in Fraud Case

Robinson & Henry’s knowledgeable attorneys give their professional insight in “From Our Perspective” where we take a closer look at successful outcomes achieved by our attorneys. 

In this episode, Civil Litigation Partner Joseph Sanchez discusses a case involving corporate fraud. A company illegally accessed a fuel distribution business’ account information and used it to acquire more than $700,000 worth of refined fuel.  Joe helped our client recover hundreds of thousands of dollars owed to them.

Past results afford no guarantee of future results; each matter is different and must be judged on its own merits. Facts are those of an actual Robinson & Henry litigation case. 

Receiving an unexpected invoice can cause concern, but a six-figure charge signals a potential crisis. Our client knew something was amiss when it received the surprise fuel bill. The company immediately reviewed its transaction history and realized a competitor had obtained the fuel using its account information without authorization.

Unauthorized transactions like this can have severe financial and operational consequences. Our client faced a significant financial burden, but their quick action stopped the fraud and prevented operational disruptions and even greater losses. 

With clear evidence in hand, the company pursued legal action against the competitor, filing a lawsuit for civil theft and fraud. 

Sanchez commended his client’s recordkeeping and quick action, which he says are important in cases like this. The fuel distribution company had meticulously gathered transaction records, communications, and financial statements that provided evidence of the unauthorized purchases. 

Sanchez says delays in reporting fraud can result in lost evidence or increased difficulties in recovering stolen assets. In this instance, the company’s immediate response helped solidify its case and put pressure on the opposing party.

Rather than engaging in a prolonged legal battle, a settlement resolved the case. The competitor agreed to pay the full $700,000 plus interest and signed a stipulated order enforcing the judgment in case of non-payment. This resolution allowed our client to recover their losses without incurring extensive legal fees or dragging the process through court for months or even years.

Settlement negotiations often provide a more efficient and cost-effective solution in fraud cases. While many business owners fear the high costs of litigation, cases like this illustrate how strategic legal action can lead to favorable resolutions without a lengthy courtroom battle. 

Fraud can happen to any business, but preventative measures can reduce the risk. Strong account security, regular monitoring, and comprehensive employee training can help companies detect and prevent unauthorized transactions before they cause significant damage.

Regular audits of financial records can also help catch discrepancies early, allowing companies to investigate potential fraud before it escalates.

When fraud occurs, businesses have various options to recover losses. Legal strategies such as demand letters, negotiations, settlements, and arbitration can be effective alternatives to costly litigation. In cases where legal action is necessary, businesses should work closely with legal professionals with experience handling fraud and financial disputes. Collaboration with law enforcement can also significantly strengthen a case.

This case is a cautionary tale for businesses of all sizes. While it’s impossible to eliminate every risk, taking proactive steps to safeguard financial accounts and maintain strong oversight can help reduce vulnerabilities. This company’s quick action, strong documentation, and strategic legal approach ensured they recovered their losses.

Companies must remain vigilant and prepared to respond when fraud threatens their financial stability in today's business environment. Preventative measures and willingness to take legal action can make all the difference in protecting a company’s financial future.

Read this video’s full transcript:

Question: Joe, thank you for joining me today. Tell me what happened to your client.

Joe: My client is a company that provides fuel distribution services nationwide. Another company, which owns and operates gas stations within Colorado, obtained possession of a large amount of refined fuel from a refinery using my client's account information at the refinery without their knowledge and consent. 

Question: How did the client discover something was wrong? 

Joe: They received invoices from the refinery for the unauthorized possession of the gasoline that was taken by the company without their knowledge and control. So that gave them the first indication that something was wrong.

Question: This wasn't a small amount of money, how substantial was the amount? 

Joe: The value of refined fuel that was taken without authorization was over $700,000. 

Question: In this case, what was your strategy to reach a resolution? 

Joe: First, for us, the best part about the situation was that my client was very efficient in obtaining the information and evidence needed to file a report with the proper law enforcement authorities.

That was really important, first, because we wanted to make sure that that got addressed. Then we took that same information and filed a civil lawsuit against the other company for theft and fraud. 

Question: Ultimately, what was the outcome in this case? 

Joe: Because we acted so fast and the evidence was so strong and compelling against the other side, it kind of forced them into a situation where they were willing to negotiate a possible settlement early on, which saved our client a lot of money in legal fees and costs, because we were able to negotiate a really good settlement on behalf of the client.

Ultimately, the other company agreed to a judgment in the full amount of the costs of the fuel that was taken plus interest. In addition, agreed to a stipulated order enforcing that judgment should they ever default on their payments. 

Question: What options do companies have when they become a victim to fraud like this? 

Joe: There's a lot of things that a company can do to avoid even trial. But at the same time, recover their losses in such a situation like this. Usually, that kind of starts with a demand letter. Negotiations and settlement, even arbitration, are things that a company can use to help obtain recovery of money, or assets that have been obtained, taken away from them unlawfully.

Question: If a company is worried about the cost of litigation, what are some of the options they have to recover losses without going to trial?

Joe: A lot that has to do with the amount and the ability to obtain the evidence needed to really become forceful in the demands and negotiation that's needed to help secure that.

But it's really important for the companies to also be cooperative and work with law enforcement, because that's another added incentive in order to get the other side to kind of come to the table and get things resolved. 

Question: And what advice do you have for companies, what can they do to protect themselves from fraud? 

Joe: One of the most important things is to really have a good monitoring system have good account security in place. Employee and employment training is a really good thing to have with those kind of strategies. It's really important for a company to really be able to avoid potentially becoming a victim of fraud in the future.